Jet Airways Planes Grounded by Lessors

Yogesh Sarkar

Administrator
In what could be troubling news for the travelers, lessors have grounded more planes of Jet Airways, over non-payment of dues. This is likely not only affecting Jet Airways’ operations, but will also lead to increase in airfare for the routes Jet is no longer able to service.

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International lessors have grounded more Jet Airways planes prior to potentially moving them out of India, as scepticism builds whether a state-led bailout of the carrier can clear their dues on time, sources familiar with the matter said.

The troubles at India's Jet, which is saddled with a billion dollars in debt, have rekindled memories of Kingfisher Airlines' collapse in 2012 that forced lessors to write off millions of dollars. Jet has defaulted on loans and has not paid pilots, leasing firms and suppliers for months.

"There's some talk that the money is going to come but lessors have heard this for too long," a leasing source said on condition of anonymity due to the sensitivity of the matter.

"We are not convinced with the restructuring plan. This is panning out just like Kingfisher. Banks took control but they never wanted to take a majority stake and run the airline."

Nine of Jet's planes have been grounded by lessors, versus the four it reported last month, with AerCap Holdings NV and BOC Aviation Ltd among those who have pulled out planes, sources told Reuters.

Cross-checks of the Jet fleet by Reuters on FlightRadar24 also show that nine of its planes have stopped flying over the last four weeks. That excludes two more that are at Singapore's Seletar Airport for, according to sources, maintenance work.

Jet, however, said on Thursday that five planes had been grounded due to non-payment of dues to lessors, as reported to regulators. The carrier added it was keeping its lessors informed about efforts to improve its financial situation.
BOC Aviation and AerCap declined to comment.

"We are waiting to see what the workout plan has in terms of us getting paid. The situation is very dicey," an executive at another lessor said. "We have to make sure our assets are protected. Indian government and speedy resolutions are not words we normally use in the same sentence."

Jet, after months of crisis-talks to plug a Rs 8,500 crore ($1.2 billion) funding hole, agreed a draft plan last week to sell a majority stake to a consortium led by the State Bank of India at Re 1, under regulations that permit banks to convert debt to equity in a defaulting firm.

The stake sale will be followed by an equity raising, debt restructuring and the sale and leaseback of jets, but the plan needs approvals from several stakeholders.

Jet shareholders will vote later on Thursday to provide general approvals for a debt-to-equity swap.

The airline has posted losses for four quarters, battered by high fuel prices and a weak currency. Its shares plunged 67 percent in 2018, wiping out $1 billion from its value and making it the second-worst performer among airline stocks globally.
Boeing optimism

Jet has a fleet of about 123, mainly Boeing planes, including 16-owned aircraft. The rest are leased from many lessors including GE Capital Aviation Services, US-based BBAM and Japan's SMBC Aviation Capital, sources said, underscoring the need to get lessors on board with the bailout plan.

Jet's management team, however, was unable to provide a timeline for the receipt of approvals and funds under the bailout plan on a call with analysts last week.

But a senior Boeing executive struck a positive note, saying "once lessors see the money come into their pockets, that's when the edginess will go away".

"Right now they are only seeing all this paperwork ... it will take three months for things to settle," Dinesh Keskar, senior vice president for Asia Pacific and India sales at Boeing Commercial Airplanes, said.

Keskar said Jet's lessors were taking deliveries of new Boeing 737 MAX planes but that they had held back 4-5 of the jets in Seattle pending payment from the Indian carrier.

The Boeing executive, however, was optimistic that the situation would stabilise in the near term.

"The government is interested in making sure that another airline doesn't go away and another debacle doesn't happen in a very high-growth country," Keskar said on the sidelines of the Aero India airshow in Bengaluru.

Source: ToI
 

Yogesh Sarkar

Administrator
More trouble for Jet Airways, it has cancelled all flight to and from Abu Dhabi.

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Jet Airways will from Monday suspend all its flights to and from Abu Dhabi, the base of Etihad which has 24 per cent stake in it and from whom fund infusion is awaited for Jet to survive. In a notice Etihad Airport Services warned passengers of "minor disruption" due to the "short notice of flight cancellation".

Jet-Etihad combine is in past few years the largest in terms of flying people in and out of India. A significant number of Jet's passengers on flights to and from Abu Dhabi are those who are travelling between India and the West like Europe, Africa and North America. The 'interim' suspension of Abu Dhabi flights means these transit passengers will also be affected.

While Etihad may mount some extra flights between India and Abu Dhabi, it may not be able to accommodate all those booked on Jet's cancelled flights. Other Indian carriers like Air India have already refused to accommodate Jet flyers. Jet did not comment on how it will accommodate passengers on flights cancelled to and from Abu Dhabi and beyond on Etihad flights to and from rest of the world from there.

At the peak of their partnership three years ago, the combined networks of Etihad and Jet offered over 250 weekly flights between Abu Dhabi and 15 cities across India. However, this number has dropped significantly in past few months due to failing financial health both. While Jet and Etihad did not give how many flights they operate from Abu Dhabi to how many Indian cities daily, travel industry sources say Etihad has 175 weekly flights to India while Jet has "one daily from Delhi (cancelled in March and April); two daily from Mumbai (no operations in March and only one flight in April); had three daily from Bangalore which are currently not operating and one from Pune with no operation in April."
"Jet is in a critical condition. But cancellation of Abu Dhabi flights will hurt Etihad even more. For example, the refund of Delhi-Abu Dhabi-New York-Abu Dhabi-Delhi ticket means a greater shelling out for Etihad as it would have carried on the flights to and from the US," said a travel agent.

Jet has significant tie-ups with Air France-KLM, Delta and Etihad for flying traffic between India and the rest of the world through those airlines' hubs. The cancellation of Abu Dhabi will mean the entire one-stop traffic between India and the West on Jet and its partners Etihad, Air France-KLM and Virgin Atlantic will now be on airline partners other than Etihad. At least till Jet gets sustainable and resumes flights there. However given Jet's precarious financial condition, it remains to be seen if flyers are confident enough to book tickets of the airline.

A senior Jet official claimed the cancellation of flights to Abu Dhabi is not linked to delay in equity infusion from Etihad. Goyal had on March 8 written to Etihad Group CEO Tony Douglas seeking urgent infusion of Rs 750 crore within a week failing which he warned the airline could even get grounded. While it is now 10 days since the SOS was sent, Jet has not received any funds from Etihad.

"The cancellation of Abu Dhabi flights is part of the ongoing route restructuring we are currently doing due to the operational issues (read grounding of over 50 planes so far for various reasons like non-payment to lessors). For the same reason, we have reduced our Delhi to Dubai and Bangkok flights," said a senior Jet official.

Incidentally, Monday (March 18) is by when Jet founder Naresh Goyal had told employees in a letter on March 1 of the "situation gently easing up in our favour". While whether that happens, remain to be seen, Jet will for now stop flights to its parter's hub from that date.

Jet officials themselves do not know when the situation will improve as that depends on fund infusion happening from Etihad and then banks restructuring loans. Asked if the Monday (March 18) date given for things to start improving will be met, the official said, "We are hoping for the best."

In the meanwhile, Jet is slowly losing its critical operational resources built over past 25 years. The lessors of its grounded aircraft are now looking at redeploying them elsewhere, including at SpiceJet. IndiGo, which is facing severe pilot shortage, is holding road shows to hire pilots, a move many in the industry see is aimed at Jet's unpaid-for-months pilots. In fact, IndiGo pilots are reportedly upset at the way the airline is going all out to woo pilots from other airlines (read Jet) and have sought a hike for themselves.
 

Yogesh Sarkar

Administrator
More bad news for Jet Airways, it seems Etihad is interested in selling its 24% stake than buying another 25-26% by bringing in 750 crores. It could just be playing hardball, in order to drive a better bargain. In the meanwhile, customers will suffer.

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The crisis in Jet Airways deepened on Monday with Etihad Airways refusing to step into the shoes of the promoter of the troubled carrier.

In its meeting with lenders, the Gulf-based airline did not commit to hiking stake as it had several pre-conditions, outside the ambit of lenders, for taking the role of a promoter.

On Monday, Jet informed the stock exchanges that it will default on interest payments on its bonds, that are due on Wednesday, due to “temporary liquidity conditions”.

Jet Airways cancels all flights to partner Etihad's hub Abu Dhabi from Monday

Later in the day, it said four more aircraft were grounded due to non-payment of dues to lessors. The airline is operating with half its original fleet and managing only 200 flights a day – half its normal schedule. Largescale cancellations are resulting in rising refund claims. The airline’s pilots, who like engineers and senior management, have salaries overdue for three months, will meet in Mumbai on Tuesday to decide the next course of action.

Jet chairman Naresh Goyal had asked Etihad, which has 24% stake in the airline, to bring in Rs 750 crore demanded by lenders as promoter contribution. Etihad, however, expressed that it was willing to sell its 24% stake if it got a price of Rs 150, which is much lower than the current price of Rs 236. Lenders are willing to provide support but unwilling to hold more than 49% equity through debt conversion.

According to sources, the government has asked lenders to work out a resolution for Jet in the same manner as in a bankruptcy proceeding but outside the ambit of the National Company Law Tribunal. Last week, SBI chairman Rajnish Kumar had said that his bank was keen to ensure that the airline keeps on running. Currently, the airline is operating thanks to cash from advance bookings and credit from oil companies and the Airports Authority of India.

From Monday, Jet has discontinued all flights to Etihad’s hub at Abu Dhabi, cutting off the latter’s traffic feed from India for onward flight in its wide-body aircraft. “Due to operational reasons, Jet has cancelled a number of flights to and from Abu Dhabi. All affected Etihad guests have been rebooked on to alternative Etihad-operated flights or offered refunds as per standard policy,” an Etihad spokesperson said. UAE’s envoy to India Ahmed Al Banna put the ball on Jet’s court. “Etihad owns 24% of Jet Airways, and Jet has its own program and management and decisions. Yes, they may be facing some difficulties, but it is up to Jet to decide what they want to do,” he told agencies.

Passengers of cancelled flights are complaining of delay in refunds. “Our instructions for airlines is to ensure DGCA regulation in such situations and keep updating us for compliance,” Director General of Civil Aviation B S Bhullar said.

Daniel D’souza, SOTC Travel’s president and country head (leisure), said the sudden withdrawal of flights to Abu Dhabi has seen an impact on travel plans. “We are reassuring customers through proactive communication on alternative travel arrangements by providing alternate flight options and bearing additional costs to the same to those who have been inconvenienced.” A MakeMyTrip spokesperson said that “with the suspension of Jet Airways’ flight services to Abu Dhabi, we are giving full refunds in case of flight cancellations. We are also assisting customers who are seeking alternate flight bookings as per their needs since Abu Dhabi is a major transit hub for west-bound travellers”.

In a mail to employees, Goyal sought more time to resolve the situation. Earlier this month, he had assured them the same would start happening by Monday (March 18). “The complexity of the (bank-led provisional resolution plan, BLPRP) process though has led to some delays and will require further short time to conclude… I am personally committed to have the process completed as soon as possible and restore much-needed stability to our operations at the earliest. Meanwhile, talks with our Strategic Partner Etihad Airways and lenders led by SBI are ongoing,” Goyal’s letter says.

On flight cancellations, he said Jet had done so as “a responsible airline to curtail our schedule and network according to the number of aircraft we are currently operating”. “I am fully committed to ensuring that your deferred salary dues are cleared on priority once all parties sign off on the resolution plan,” he added.

Source: ToI
 
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Yogesh Sarkar

Administrator
As per DGCA, Jet Airways is currently operating just 41 planes out of its original fleet of 119. Add to that, the pilots are now threatening to go on strike, if they are not paid by 31st March 2019.

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jet Airways pilots on Tuesday decided not to fly from April 1 if the company has not clear their pending salaries by March 31, said sources familiar with the matter.

Jet Airways’ domestic pilots' body National Aviator’s Guild (NAG) on Tuesday held its annual general meeting and decided that if there is no proper clarity on resolution process, salary payment by March 31 then they will stop flying from next month, sources told CNBC-TV18, requesting anonymity.

"We are conducting a silent march now. Around 300 pilots are going to Siroya, our office..." one of the pilots attended the meeting said.

The meeting came in the backdrop of drastically reduced operations and non-payment of salaries to pilots along with engineers and other senior staff for more than three months now.

The guild, which came into being almost a decade ago, represents around 1,000 domestic pilots at the airline.

The pilots with other group of people have not received salary payments almost since December.

Having failed to get any assurance from the management on payment of overdue salaries, the pilots' body last week wrote to union labour minister Santosh Gangwar, seeking his intervention in recovering their dues along with the accumulated interest.

CNBC-TV18 reviewed a copy of the letter.

In the letter, which was also marked to the Directorate General of Civil Aviation, the union warned the government and the regulator that the pilots of the airline are getting increasingly frustrated as salaries have not been paid on time and in full since September and at present, 87.5 percent of December and full salaries of January and February amount to outstanding dues.

"This situation is leading to extreme tension and frustration amongst our members, hardly an ideal situation for pilots in the cockpit. Monthly EMIs have to be met, school and college fees paid, along with medical bills of ageing parents," the union had said in the letter.

While the airline's management had earlier indicated that pending salaries will be paid by March and the salary schedule would get normalised from April, the situation has taken a turn for the worse.

"All pleas to the management in this regard have fallen on deaf ears," the pilot union wrote to the government, demanding that the pilots now want the airline to pay the pending salaries along with interest.

"That M/s. Jet Airways pay to the member Pilots the arrears of salary (inclusive of all allowances) due to date and pay interest thereon at commercial rate from the date due till realisation and hereinafter pay the full salary (inclusive of all allowances) on the 1st day of every month) and for any salaries paid after the said due date, pay interest thereon at commercial rate from the date due till realisation," the letter said.

The letter brings out a sorry state of affairs at the airline which has often been tagged as the most popular airline among pilots.

The Naresh Goyal-promoted Jet Airways, which is partially owned by UAE flag carrier Etihad, is in financial distress for almost a year now with four consecutive quarters of losses.

The severe liquidity crunch has forced it to ground aircraft, cancelling flights in huge numbers, shut down stations and delay salary payments to a group of staff.

As per DGCA, the airline is currently operating 41 planes or 34 percent of its total fleet of 119 Aircraft.

Source: CNBC TV18
 
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adsatinder

explorer
[https://im]

Jet lenders may move into cockpit, replace board

Arindam Majumder and Arup Roychoudhury

1 hour ago

According to the revised plan, promoter Naresh Goyal, his wife Anita Goyal and the directors nominated by the promoter would be asked to step down from the board, and the lenders, as part of the resolution process, will infuse around Rs 1,200 crore into the airline as emergency funding.



Lenders of Jet Airways are likely to take management control of the airline by superseding the current board, it is learnt.

A consortium of lenders, led by State Bank of India, would operate the airline managed by a professional board, a source in the know said.

The move follows Etihad’s refusal to infuse additional funds in Jet under the current terms of the bank-led resolution plan. The lenders will sell their stake in Jet at an appropriate time.



According to the revised plan, promoter Naresh Goyal, his wife Anita Goyal and the directors nominated by the promoter would be asked to step down from the board, sources in the know said. The promoter-appointed directors include Nasim Zaidi and Gaurang Shetty, who’s also an executive at the airline.

The lenders, as part of the resolution process will infuse around Rs 1,200 crore into the airline as emergency funding.

State-owned banks including State Bank of India and Punjab National Bank are the main lenders to Jet, which is now operating only one-third of its fleet of planes as the rest have been grounded due to non-payment to lessors.

“It’s unfortunate that both the owners have not been able to reach a consensus. But banks have decided that the company will not be allowed to fail and will take control of the airline,” said a senior banker leading the resolution process. A resolution is expected before the end of this month.

According to the plan, the airline will issue additional 114 million equity shares. After the restructuring, the lenders’ consortium led by the SBI, along with national sovereign fund National Infrastructure Investment Fund (NIIF) will hold around 51 per cent stake in the airline.

The lenders had to redraw the resolution plan after Etihad Airways CEO Tony Douglas refused to agree on the contours of the deal. Etihad, which holds 24 per cent in Jet, informed the lenders’ consortium that it would not participate in the rights issue or infuse fresh funds under the current terms and conditions of the resolution plan.

However, bank executives maintained that talks are still on with Etihad as no ''conclusive'' decision to exit has been taken by the Abu Dhabi-headquartered airline.

“There are multiple examples in the world where banks have taken over operations of the company and sold its stake to a suitor subsequently. We are definitely not going to run the company for a long time. This is a transitory holding,” a top banker said.

It’s important to have a resolution process by end of this month because if there’s no agreement by April 1 (180 days from January 1), Jet Airways will have to be declared a Non-Performing Account (NPA). On January 1, Jet Airways had informed the stock exchanges that it had defaulted on debt repayment to its consortium of lenders.

SBI chairman Rajnish Kumar, who met Union Finance Minister Arun Jaitley, along with senior officials including Nripendra Misra, principal secretary to the Prime Minister, on Wednesday, said taking Jet Airways to the insolvency court was not an option as it would lead to complete value erosion of the company.

“There are Rs 4000 crore worth of creditors, nobody wants to take Jet Airways through the insolvency process,” said Kumar.

The Insolvency and Bankruptcy Code (IBC), in case of service industry like an airline is the last option, according to Kumar.

“Under IBC, the resolution of a service industry entity is nearly impossible and would mean we are grounding the airline. We will keep trying.... We have not reached a point where we can say enough is enough and nothing else can be done,” the SBI chairman said.




 

adsatinder

explorer
The chequered flight path of Jet Airways

March 20, 2019 16:06 IST

An overriding ambition to rule the domestic skies prevented Jet Airways from becoming a strong and formidable player in the international market. The Sahara buy added to the complexity of its operations and a dilution of what the airline stood for, says Anjuli Bhargava.

[https://im]

As the Jet Airways saga appears to be drawing to a close, it may be worthwhile to try and understand what went wrong.

When did things slip so out of control?



This is the question industry, passengers, frequent fliers, businessmen in the country and practically anyone who has flown is asking: Whatever happened to Jet Airways?

Since I have been writing on aviation for a while now, I am constantly asked why and why now by all and sundry.

It may be worthwhile to try and answer this.

First and foremost, there’s nothing sudden about the turn of events.

Jet Airways has been facing financial turbulence ever since the low fare revolution hit Indian skies.

There have been at least three clear instances - 2008, 2012 and 2018 - when the carrier has failed to pay its own employees on time and tried to cut staff numbers.

The 2008 episode was a public relations disaster for the airline, with the promoter subsequently apologising on national television.

Being broke has become business as usual.

As I see it, Jet Airways’ 25 year journey can be seen in terms of three clear stages: The rise, the fight and the fall.

The rise (1993-2003): Naresh Goyal was the man of the moment. His first aircraft landed in the presence of JRD Tata.

Jet built an excellent airline product and service, had some of the best-trained cabin crew, pilots and engineers.

The aircraft had a brand new feel and the crew had class, a polish that is largely missing today.

Its business class was coveted, with a long list of loyal fliers.

The airline offered the best lounges, attractive offers on its frequent flier programme and an impeccable service on board with a reliable and on-time service.

It offered fierce competition to both the state owned Indian Airlines and a few other competitors who were in the fray.

By 2003, Jet Airways had 41 of the latest aircraft and had risen to become India’s preferred and best airline, with a series of firsts attached to its name.

The fight (2004-10): Jet’s troubles began when Air Deccan and others entered the Indian market.

The airline was a full service carrier offering all the luxuries that were associated with making flying pleasurable.

Costs were built in from scratch. But once the low fare rivals came in, Jet was forced to sell at uncompetitive fares.

It’s like building an Oberoi or Taj room but selling it at OYO rates.

In 2004, Goyal took a decision to go international, a smart and calculated move but one he failed to fully capitalise on.

If he had been less paranoid about competition at home, Jet may well have been a serious international airline operating from India today.

It could have worked out arrangements with other domestic players to feed traffic into its hubs and carried passengers out - much like an Emirates or a Singapore Airlines.

But Goyal was unwilling to concede defeat on domestic sectors.

That led him to make the biggest mistake - buying Sahara in 2006-07 for an absurd price - more to thwart arch rival Vijay Mallya than adding any real value to his own business.

In other words, an overriding ambition to rule the domestic skies prevented Jet Airways from becoming a strong and formidable player in the international market.

The Sahara buy added to the complexity of its operations and a dilution of what the airline stood for.

Jetlite, JetKonnect and later the merger of these two reflected the confusion.

The fall (2011-19): Even as late as the third quarter of 2010, Jet was the largest airline in India with a share of 22 per cent.

It is from this point onward that things began to spiral downwards.

Had Goyal at even this stage realised the opportunity he had, Jet Airways could have emerged as primarily a leading international carrier out of India.

But post 2011, it was almost like Goyal was stumbling from one crisis to another.

Jet appeared to lose direction and it certainly lost speed.

While its international operations did not consolidate into anything substantial, the domestic operations continued to dither and bleed.

This is what eventually led to the sell-out to Etihad.

In 2019, the Jet of 1993 is no longer traceable. The battle seems to have been lost.

Photograph: Vivek Prakash/Reuters

Anjuli Bhargava

Source: [https://im]

 
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Yogesh Sarkar

Administrator
PSU banks agree to keep pumping money in to Jet Airways, until a solution is found i.e. giving it more money to burn through, even though it is in no position to return Rs. 8000 crores and no one is interested in buying a stake in it! At the end of day it would be your and my money, which will go down the drain for a airline, which is in dire straits due to to its own mismanagement!

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Minority lenders that are part of the consortium that has lent to Jet Airways have agreed to grant priority status to funding that would be provided by State Bank of India (SBI) and Punjab National Bank (PNB). This will enable SBI and PNB to provide emergency funding to keep the airline afloat until a resolution plan is in place.

Priority status for the loans would mean that if at the time of resolution lenders need to take a haircut on their historical exposure, the emergency funding would not be subject to any deductions. Normally in the case of default, lenders are hesitant to throw good money after bad. But often, like in most bankruptcy cases, there is a need for additional finance to keep the business going. This is why lenders have a provision for priority finance, where the lenders are given top priority at the time of settlement.

Earlier, SBI was not in favour of emergency funding and wanted a durable plan rather than a ‘band-aid’ solution. However, the crisis at Jet Airways is deepening by the day with promoter Naresh Goyal playing a brinkmanship game. So far, over 80 planes in Jet Airways’ fleet have been grounded by lessors for non-payment of dues.

Bankers say that a revival plan would require sacrifice from the lenders, which would be subject to a new promoter stepping in with equity infusion. With the Insolvency and Bankruptcy Code in place, any sacrifice is done only during the bankruptcy resolution process. However, in the case of Jet Airways, bankruptcy proceedings are not an option. Lenders say that initiating bankruptcy proceedings could result in lessors attaching their aircraft. Jet’s own aircraft comprise only a fraction of the entire fleet.

This would mean that lenders will be left only with the brand and flight routes in the event of a bankruptcy proceeding. Considering that Jet Airways had outstanding debt of over Rs 8,000 crore, the best option for lenders is to sell the airline as a going concern. A prerequisite for selling the airline is evicting Goyal from the promoter’s chair.

The public sector banks that have lent to Jet are Canara Bank, Bank of India, Syndicate Bank, Indian Overseas Bank and Allahabad Bank in addition to SBI and PNB in the consortium. For potential buyers, the downside of acquiring Jet as a going concern is that they will have to take on all its liabilities, including dues to Airports Authority, employees and the liability in respect of thousands of cancelled flights. In a bid to raise money for its operations, the airline had aggressively sold tickets last month. However, with aircraft being grounded by the day, the airline has been forced to cancel hundreds of flights. There are 26 banks that have lent to Jet — both private & foreign lenders.

Source: ToI
 

deepam

Super User
The public sector banks that have lent to Jet are Canara Bank, Bank of India, Syndicate Bank, Indian Overseas Bank and Allahabad Bank in addition to SBI and PNB in the consortium.
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Yes, we have to pay for high profile companies mismanagement and also to so called poor people [farmer loan waive off] who do not pay Income tax but avail all subsidies and roam in luxury cars like Audi, BMW and MERCs'.
 

deepam

Super User
One of my friend had booked Mangaluru - Mumbai - Delhi sector for April 20 in Jet and that flight is cancelled, so he has to fly in other airline.
 
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